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The CFPB has been digging into the impacts that overdraft and non-sufficient funds (NSF) fees have on credit union members and banking customers for the past several months.
Two research reports released by the bureau in late 2021 detailed how banks especially have continued relying on "these fees as a major source of revenue and how they do not compete on transparent, upfront pricing."
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In a blog post on Thursday, the CFPB announced its "Supervision team is seeking detailed information about entities' overdraft practices, including how they assess their fees, their grace periods, the dollar thresholds above which fees are assessed and caps on the number of fees charged per day, or per statement period."
The CFPB post stated the bureau is looking into what it calls five key metric areas:
- Total annual dollar amount consumers receive in overdraft coverage compared to the amount of fees charged.
- Annual dollar amount of overdraft fees charged per active checking account.
- Annual dollar amount of NSF fees charged per active checking account.
- Prevalence of frequent overdrafters: The share of active checking accounts with more than six and more than 12 overdraft and/or NSF fees per year.
- Share of active checking accounts that are opted into overdraft programs for ATM and one-time debit transactions.
"We intend to use this information to identify institutions for further examination and review. We also plan to provide feedback to each institution, as well as to share this information with other regulators. This supervisory information will not be made public but is intended to support our ongoing work," the CFPB's post stated.
Interestingly, the CFPB gently praised the credit unions and some banks that have already reduced or eliminated overdraft or NSF fees by changing its fee policies.
"Many banks have yet to improve their practices. Our hope is that by the Bureau collecting and sharing these metrics, institutions can better understand the impact of their overdraft practices on their consumers relative to their peers, and that this knowledge further boosts competition and improves outcomes for American families," the post stated.
In the past year, several credit unions around the country have either eliminated or drastically reduced their overdraft or NSF fees.
The public is able to view the complete set of questions from the CFPB concerning overdraft and NSF fees policies.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
